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Pot stocks are here to stay – and the best ones are going to be hugely profitable. That's because the cannabis industry is booming…
June was the best-selling month ever for recreational marijuana in Colorado, bringing in a whopping $24.7 million in total sales, according to state tax collections reported on August 8 (the most recent available report). So far in 2014, the state has pulled in a total of $29.8 million in pot-related taxes on both medical and recreational use, from $308 million in sales.
"The marijuana industry is growing rapidly, and there's big money to be made for investors," Money Morning Defense & Tech Specialist Michael A. Robinson said.
Colorado's recreational pot revenue may soon surpass its medical-use sales. In January, the state's 2.9% sales tax on medical marijuana brought in nearly 50% more than its recreational pot sales tax counterpart. But by June, the medical sales tax brought in just 20% more than the recreational weed tax, theAssociated Pressreported this month.
Colorado's not the only state raking in the pot profits. Another just collected more than $1 million in its first-ever month with legalized recreational sales padding the tax collector's bill…
Pot Profits Spread Beyond Colorado's Borders
Besides Colorado, Washington is the only other state that's legalized marijuana for recreational use. July sales reached nearly $4 million, creating more than $1 million in tax revenue – higher than Colorado's first month of recreational sales.
"It's off to a healthy start, considering that the system isn't fully up and running yet," Washington Liquor Control Board spokesman Brian Smith said.
According to a forecast by the Economic and Revenue Forecast Council earlier this year, the state's recreational marijuana market is projected to bring in nearly $190 million over a four-year period starting mid-2015.
Not only are the states that have legalized cannabis use raking in cash, but their success is encouraging more states to open up their free markets to the drug.
Right now, 15 states have decriminalized certain amounts of possession of the drug, and 40 states have taken at least some action to ease their drug laws since 2009, according to Pew Research Center.
Public sentiment toward the drug is also becoming drastically more positive.
According to a recent Pew poll, 54% of Americans believe the drug should be legalized, up slightly from 52% in 2013. Support has risen a sharp 13% since 2010.
Additionally, 69% of people think alcohol is more harmful to a person's health than pot, and 63% believe it's more harmful to society than pot. A recent government poll showed that 18.9 million Americans over the age of 12 used marijuana in the prior month – 7.3% of the population.
"With increased acceptance and legalization of marijuana for both recreational and medical purposes, this is one resource whose production and use are sure to grow exponentially, perhaps for decades," Money Morning Resource Specialist Peter Krauth told readers in April.
With recreational legalization just beginning to catch on, there are few pure plays in the sector – and even fewer that aren't risky – for now.
For instance, Growlife (OTCMKTS: PHOT), which sells lights for indoor growing and other equipment for legal cultivation, saw its shares zoom nearly 300% from January through April. But on Aug. 5, the U.S. Securities and Exchange Commission shut down trading on PHOT. It charged four promoters with manipulating shares, along with some other marijuana-related microcaps, in a pump-and-dump scheme.
While it'll take some time for the best investments in this sector to shine through, the medical side of the marijuana market offers a smarter play right now.